31 October 2011

If you want to get to New York, it does little good to reiterate that you should be in New York. The first step is knowing where you are and accepting that, because how you go about getting to New York depends entirely on where you are.

This seems the paradox of change. Nothing changes until or unless you first accept where you are. You can't find your way to New York if you start out denying that you're in Florida.

And here is another curious bit about this acceptance. Not only can you start with acceptance of where you are as a starting point, you might - as you look at it for what it is rather than in light of what it should be - you might just realize that there is nothing wrong with being in Florida.

The paradox, then, is that only people who are accepting of what is can change what is.

28 October 2011

Herman Cain and Ron Paul are not conservatives. They are reactionaries. They do not want to preserver the status quo but instead want to return to an earlier state of development. Barack Obama is a conservative.

When Martin Luther labeled the pope the anti-Christ and declared that we are all priests, he took on the status quo. He moved the West forward and away from a world where the pope could dictate what people thought and believed. The people who resisted his Protestant Revolution were conservatives, trying to hold on to the status quo.

Henry VIII followed in Martin Luther's protestant ways, declaring himself the head of the Church of England and breaking ties to the pope in Rome. When his Catholic daughter Mary became queen, she tried to take England back to Catholicism. She wanted to undo the error of her father's Protestant ways. (Which, among other things, caused her father to commit the grievous sin of divorcing her mother.) Mary, trying to rid England of the Church of England, was a reactionary. (Actually, they called her Bloody Mary because she had so many Protestants executed, but Reactionary Mary has a ring to it.)

Resist change - conservative.
Reverse change - reactionary.

By that measure, Ron Paul is a reactionary. I have trouble understanding how the policies he recommends would be much different from what we had before 1913. From 1837 to 1913, for instance, the US had no central bank, no Federal Reserve. Ron Paul would like us to believe that a central bank is the cause of things like recessions but during this period there were plenty of economic problems - including recessions AND depressions that originated in the financial sector. In any case, Ron Paul would, like Queen Mary with the Church of England, correct an error of a previous generation and rid us of the Fed. People like he and Herman Cain would love to rid us of all the ills of the twentieth century - from business regulations put in place to end egregious practices like child labor and rampant pollution to social programs like unemployment insurance and social security. They'd like to return us to the economy we had from about 1800 to 1900. That was - for those of you who skipped those chapters in your history books - an ugly time, even if considerably better than the Dark Ages to which Reactionary Mary would have returned England.

It would be fascinating if we actually had a progressive option to complement this small menu of reactionary and conservative choices.

27 October 2011

Once Greece became a part of the euro zone, they were able to borrow money for far less than they had when they had to pay the going rate for Greek currency. This, among other things, led to unsustainable levels of debt that Greece simply can't afford to pay down. The government has passed austerity measures, raising taxes and cutting government spending and in the process slowing the economy and triggering riots. Even with this, they aren't going to pay down their debt.

There are two silly options. One, they can sue all modern countries for patent infringement on concepts like democracy and philosophy. Two, they could continue to make the attempt to pay down their debt, something that might require paying about 20% of GDP per year. Both possible but wildly improbable.

Before I make my simple suggestion for how to resolve this, let me tell you what I'm not whining about. I'm not whining about the fact that my portfolio has taken a serious hit. Again. Also, my house has dropped a huge amount in the last few years. Because of fluctuations in housing and stock markets, my net worth has dropped by tens of percent. I wish this hadn't happened but you know what? This is what it means to invest. You accept risk in return for ... well, for returns. You don't whine about the loss. You don't demand that some bank or company give you money for what your house or stocks were once worth. You accept the lose and move on. Why is it that we think bond investors should be exempt from this reality of investing?

So, Greece cannot pay back its debt. Why not write it down? Why not pay off half or less? Investors will lose money, of course. Join the club.

Will this create problems? Yes. Every solution will. But the sooner debt is written off, the sooner the Greek government can begin with something short of radical contractions in spending that risk triggering a recession or even depression.

17 October 2011

The pope argues that the purpose of sex is for procreation,
not pleasure, and that it is sin to interrupt sex with any birth control that
would suppress its purpose, denying life to some new soul. In a sense (and I’m
sure he’d never say it like this), the pope teaches that life begins at the
moment of ejaculation.

Most Protestants disagree with this religious belief. Some
Protestants – essentially the religious right in the US – believe instead that life
begins at conception. Based on this belief, they have no problem with any kind
of birth control but do want to make all abortions illegal. And I think that
they share the pope’s disapproval of sex as something to be used just for
mindless pleasure.

And of course secular folks and other religious folks don't base their decision on what popes or Protestants believe.

Now it is worth pointing out that at the moment of
conception the new life doesn’t look much different from what it looks like at
the moment before; whether we’re talking about separate egg and sperm or a newly
formed zygote combining the two, we’re talking about something too small to see
with the naked eye.

I think that this belief that life begins at conception is more
defensible than the belief that it begins at ejaculation, if only because it is
less comfortable to say ejaculation during a public debate. But in both cases,
we’re talking about a life that has no viable chance outside of the womb, life
that is less conscious of its surroundings than the simplest insect, a life
that bears less resemblance to a baby than does any mammal. If we say that life begins at conception we - like those arguing it starts at ejaculation - are not arguing that it is recognizably human at that moment but instead are arguing for its potential. That is, we’re
expressing a belief, not stating a fact, when we say that this is when human life
begins.

Most people in the US – religious or otherwise – believe that
life begins sometime between conception and birth. They don’t know precisely
when but they seem to believe that at the moment before birth, life in the womb
is hardly different from the new born baby it is about to become and at the
moment after conception, life in the womb is hardly different from the sperm and
egg it recently was. Most people believe that while it is harder to pinpoint the
start of life in this nine month window, it is more reasonable to locate it
somewhere other than at its extreme end points.

This question about when life begins can be answered by
religion, philosophy, or science, but it cannot be answered definitely by any
one of these. Different scientists, different philosophers, and different
religious people will reach different conclusions about when life starts. Making
this determination requires judgment.

The argument for legal abortion rests on this
fact: reasonable, conscientious people will disagree about when life begins.

What do most Americans believe? Well, about two-thirds
believe that a woman has a right to an abortion in the first trimester (which is
to say, they believe that life does not begin until at least three months after
conception). By contrast, only about a third of Americans believe that
abortions should be legal in the final trimester, roughly up to the point of
birth.

If we were going to use the democratic approach to deciding
abortion law, we’d probably have the following:

-A federal law that gave women in any state the
right to an abortion in the first trimester

-State laws that may or may not give women the
right to an abortion in the second trimester

-Abortion in the third trimester made illegal except
in cases where the mother’s life is threatened.

Again, this is not a question about whether a woman has the right
to kill a baby because she wants a better life, one with the promise of more
economic prosperity and freedom. She doesn’t have that right. The issue of
abortion instead stems from a legitimate question about when life begins.

The question of whether one person can kill another in the hopes
of economic prosperity and freedom is instead one we should ask when questioning
whether to go to war to “liberate” another country, knowing that this decision
carries with it the inevitable destruction of lives that are years and decades past the point
of conception. Individuals don't have that right; apparently states do.

Oh and as a footnote? Even if a person wants to base her
decision about abortion on the Bible (obviously not a basis for modern law), she’ll have little guidance. There is at
least one verse that mentions God knowing us even in the womb, implying that a fetus has the rights of a person. But it also states in Exodus 21:22 that if a man injures a woman so she miscarries, he
should be fined. In a kingdom that meted out the death penalty for fornication,
though, this punishment is fairly mild. Miscarry through violence is not an
abortion chosen by the woman, by the way; this is an abortion performed against
her will. Obviously, in the Old Testament they did not consider life in the womb
to have the same rights as a newborn baby.
Finally, Jesus never touches on abortion or when life begins. Even if you want to base your personal decision on the Bible, you are
left to your own judgment. And it is the exercise of that judgment, apparently, that so offends those who would make abortion illegal.

Oh, and lest you think that this simple clarification should be dated and irrelevant - as I once did - I'd like to point out that the good people of Mississippi will vote on a (state) constitutional amendment that rules that life begins at the moment of conception - opinion become law.

15 October 2011

The Republicans are like white men dancing. They've no sense of economic rhythm.

During the Bush years, Republicans applauded deficit spending, cheering for two military invasions coupled with tax cuts. Dick Cheney announced that "deficits don't matter." Fiscal policy - that mix of tax cuts and government spending - was expansionary and just created a bubble in an economy where jobs and incomes were barely keeping pace with population growth and inflation. Fiscal policy helped to create a housing bubble.

Now, with unemployment at its highest in decades, Republicans seem to think that only deficits matter. States and local governments have been shedding jobs at least as fast as companies can create them. Now that the private sector is - at best - sluggish, the Republican tilt is towards fiscal policy that contracts the economy. They aren't advocating tax hikes but they are demanding that government budgets be slashed. Sadly, the only attempt at coordination between the parties seems to be on the need for a fiscal policy that contracts; Republicans want more spending cuts and Democrats want tax hikes.

David Cameron of the UK is a smart, charismatic politician who heads the Conservative Party and is now the British Prime Minister. For about a year and a half, he's been engaged in an austerity program, raising taxes and slashing spending. His intention is to get Britain back on track. The result? Economic growth of 0.1% and the highest jobless numbers in 15 years.

Deficits matter. But not nearly as much as unemployment. Any program that has a hope of working has to first address unemployment and GDP growth AND THEN deficits. To reverse that is to risk falling into a downward spiral.

At the root of the problem is an obsolete worldview that sees the government as simply a big household. Any sane person running a household budget will cut spending in down times and raise them in good. This is not just sensible, it is intuitive. But applied to the level of the macroeconomy, it is a wildly misleading intuition, akin to the notion that it is the sun that orbits the earth rather than vice versa. What is obvious is wrong. To offset expansions that can create inflation in prices of goods or even stocks and houses, the government should actually spend less, tax more, be more austere in times of plenty. This is the opposite of what a household should do. A government should dampen economic cycles, not exacerbate them. And when times are tough, rather than practice austerity, governments should spend freely and tax lightly, stimulating spending, investment, and job creation when the private sector is lagging.

The debate between whether government should constitute 25% or 50% of the economy is a legitimate one and Republicans have every right to argue for smaller government as counter balance to progressives who argue for larger government. That's fine. What's absurd and totally dangerous is calling for fiscal austerity, for smaller government, in the midst of a downturn. Failure to understand this distinction is either willful or stupid.

The fact of governments needing to offset business cycles is not new. This is something well known and well documented. It defines macroeconomics. And it is past time that the Republicans find their economic Arthur Murray who can teach them to hear the rhythm and respond to it. If they don't the result is going to be even more ugly.

14 October 2011

I can't help but wonder if we've gone through three stages in our political conversation. Years ago, in stage one, politicians talked to complexity in fairly complex terms. More recently, in stage two, politicians simplified a reality they realized was complex into sound bites. Now, it seems as though politicians have come to believe their own sound bites, confusing their simplifications of it with actual reality. How else to explain Herman Cain's 9-9-9 proposal that would slash revenues in a time of chronic deficits and zero out capital gains tax but create a 9% national sales tax?

I blame the League of Women Voters for this. They were the early sponsors of presidential debates who agreed to debating terms that essentially meant that a candidate had only to defend his position for - at most - two minutes. The debates became the forum for discussions about real issues that were, necessarily, simplified.

Which brings me to my point.

My buddy Eric made a really insightful comment. He asked why we have candidates debate when the real test of their time in office is their ability to negotiate across the aisle, reaching an agreement with folks who have a different ideology?

So, why not replace debates with live negotiations? Rather than have Obama debate fine points of disagreement with Hillary Clinton, why not have him come to some agreement with Eric Cantor? Or instead of hearing Rick Santorum attack Mitt Romney over some minor disagreement, why not hear him try to reach an agreement with Harry Reid?

Wouldn't a negotiation tell us much more about a candidate's ability to govern than a debate? And wouldn't it force them out of sound bites, force them to do more to acknowledge the complexity of reality? And wouldn't it tell us much more about what they might actually accomplish as opposed to just what legislation they might oppose?

It's a fairly simple idea. But it just might make things more complex and interesting.

Here's a bit of social invention that's worth mentioning. (Thank you @Tisiwoota at Twitter for pointing me to this.)

California became the first state to legalize a Flexible Purpose Corporation and the sixth to enable the creation of a Benefit Corporation. There's a great summary by Kyle Westaway here.

Put simply, a Benefit Corporation does not have to primarily serve shareholders but can choose to balance returns to shareholders with other stakeholders, such as employees, customers, and the environment. The Flexible Purpose Corporation actually articulates a purpose or mission in its charter. It might, for instance, have a purpose of employing the poor.

We rightfully laud computers, smart phones, cars ... and tend to forget that they were enabled by an earlier social invention called the corporation. One can hardly imagine what will emerge from these new types of corporations that have even more autonomy to create what makes sense.

Why is this so cool? It will free up communities to use one of the most powerful social inventions ever (the corporation) without being bound to profit maximization. I explain it more here in an excerpt from my book, The Fourth Economy.

After the nation-state emerged as more powerful than the
church, it took centuries for it to let go of the idea that its goal was the
same as that of the church. The nation-state got its power from control over
land, the first economy’s limit to progress. Yet for the longest time, monarchs
thought it their obligation to also look after the souls of their citizenry. It
would have seemed irresponsible not to. “Bloody” Mary used violence to move
England towards Catholicism, and her younger sister Elizabeth used violence to
move it back towards Anglicanism.

Once the nation-state became a tool for improving one’s
condition in this life and not the next, once rulers gave up on dictating
religion, a great deal of grief was avoided and a great deal of good could be
done.

It’s probably not surprising that the newly dominant
institution would think it should prove itself by meeting the goals of the
previously dominant institution. Those goals become so intertwined through all
of society that legitimacy depends on at least acknowledging those old goals.
It is hard to imagine a Renaissance king dismissing religion as unimportant for
policy, saying that he would focus on GDP growth instead, for instance. (For
one thing, GDP is a measure we didn’t even have until about a century ago.)

So as the corporation emerged to compete with the bank as
the most powerful institution in the West, it adopted the goals of the bank.
That is, it saw its purpose as profit.

On the surface, this hardly seems problematic. It is, you
might say, a fact of life. But as John Abramson points out, the purpose of
pharmaceutical companies is not to maximize the health of Americans; it is,
instead, to maximize profits. This is problematic. He cites a World Health
Organization study that ranks the US health 15th overall in the
world, a ranking that drops to 37th if that ranking adjusts for per
person spending on healthcare.[1]
This in spite of the fact that US healthcare costs per person are double that
of any other developed nation. Maximizing profits does not automatically
maximize health.

The former management gurus Peter Drucker and Russell Ackoff
both have claimed that profit is to a corporation what oxygen is to a person:
vital but by no means its purpose. Companies have to make profit but they don’t
have to subordinate everything to it.

Robert Beyster, a man who helped to create billions in
wealth, wrote that profit was a clear goal for the divisions within his company
SAIC, but the goal was not profit maximization. He acknowledges that being
privately held by employees exempted them from many of the pressures that
publicly held companies feel to subordinate everything else to profits. (And
curiously, SAIC’s performance with such an approach was such that any investor
would have been lucky to hold its stock. More on this later.)

To make explicit that something other than profits should
direct corporate behavior is to suggest that corporations have to define the
kind of life they are trying to create for customers, investors, employees, and
their community. This is – it seems – a fairly interesting starting point for
any corporation. It suggests that the
corporation will more explicitly become a tool for helping the individual to
create the life of his own choosing – even if that individual is not a CEO.

11 October 2011

This has the flavor of an old man's rant, but wasn't there a time when it seemed more obviously the case that the folks in charge had a clue about what to do? Is it simply because we realize how little they actually do know that the ratio of clue to clueless has fallen so precipitously? Or do the folks in charge actually look more confused of late?

07 October 2011

It’s worth asking about the difference between
nation-building and state-building.

10th anniversary of invasion of Afghanistan and still we confuse war and occupation, nation-building and setting up a government.

State is the government – the bureaucracy, administration,
laws, standing army …

Nation is the sense of shared identity that makes a people
feel more like Americans than Virginians or more like Italians than Venetians.
That’s a tougher thing to create. (It wasn’t until AFTER the Gettysburg Address
that we got the term “the United States is” rather than the “the United States
are.”)

It seems like there are at least two errors we’re making in
Afghanistan.

1.We
keep talking about a war. It’s not a war. The war quickly ended. Now it’s an occupation.

2.We
keep talking about nation-building when really all we’re doing is state
building. Their sense of self is tribal, not national.

We never did nation-building in the Marshall Plan. Japan and
Germany were very much nations before WWII. All we did was some economic
development and some state-building. That’s a terribly impressive, but much easier, task. Or, put differently, rebuilding a government and economy within years after a war is a huge but doable task. By contrast, there is no evidence that outside forces can build a nation in just a decade or two - or even at all. History suggests that this is a task that has to be done organically and over a generation or two or three.

05 October 2011

‎"Remembering that I'll be dead soon is the most
important tool I've ever encountered to help me make the big decisions in life.
Because almost everything, all external expectations, all pride, all fear of
embarassment or failure, these things fall away in the face of death leaving
only what is truly important. Remembering you are going to die is the best way
I know to avoid the trap of thinking you have
something to lose. You are already naked - there is no reason not to follow
your heart. Your time is limited, so don't waste it living someone else's life.
Don't be trapped by dogma, which is living with the results of other people's
thinking. Don't let the noise of other's opinions drown out your own inner
voice. And most important, have the courage to follow your heart and intuition
- they somehow already know what you truly want to become. Everything else is
secondary"